Anupam Shrivastava, chairman and managing director, BSNL
During 2016, Bharat Sanchar Nigam Limited (BSNL) continued its efforts to improve its operational efficiency and achieve financial growth. With its renewed focus on data services and customer acquisition, the operator claims to be back on track and ready to take on competition. In fact, data has emerged as one of the key building blocks of the operator’s new growth strategy. In an interview with tele.net, Anupam Shrivastava, chairman and managing director, BSNL, talks about the company’s future strategy, as well as the growth drivers and outlook for the sector…
What were the key developments witnessed by the sector during 2016?
There were several developments that impacted the sector during 2016. The biggest one was the entry of a new competitor, Reliance Jio Infocomm Limited (RJIL), which took the level of competition in the sector a notch higher. At the same, it created hope for the sector, as data usage has picked up significantly post RJIL’s launch. Interestingly, while it was expected that RJIL’s entry would reduce data traffic flow for the incumbent operators, the contrary has happened for BSNL. RJIL’s launch is making people more tech savvy and they have started consuming more data. As a result, the data traffic on our network has grown from 270-280 TB per day to about 330-340 TB per day. Data growth is driving the sector.
Another interesting trend is the resurrection of landlines, particularly broadband through landlines. Even at the global level, all major landline companies or incumbent companies that are in the landline/optical fibre business are using the latest technologies to leverage landline networks for broadband provisioning.
In addition, Wi-Fi is emerging in a big way. BSNL too is actively involved in this space, both to extend its broadband services and utilise Wi-Fi hotspots for offering a 4G experience.
What were BSNL’s key performance highlights?
It was a good year for BSNL. We turned EBITDA (earnings before interest, taxes, depreciation and amortisation)-positive in 2014-15 at Rs 6.72 billion and in 2015-16, we increased our EBITDA further to Rs 32.8 billion, a sixfold jump. Our revenues grew by 15 per cent year on year in 2015-16, while our net loss reduced by 50-60 per cent. Clearly, BSNL has embarked on a revival path. As far as operational performance is concerned, the company recorded the highest number of subscriber additions up until September 2016, as per the Telecom Regulatory Authority of India.
How has demonetisation impacted the company’s business?
While there was initially some impact on cashflows, the drive has opened up new avenues for the industry. People are now doing digital transactions in a big way and BSNL is leveraging this opportunity. We have recently launched a mobile wallet called “MobiCash” in association with the State Bank of India (SBI). The USP of this wallet is that it works on both smartphones as well as feature phones as it can be accessed through SMS and USSD as well. Further, it allows users a cash-in, cash-out facility at BSNL retail outlets. We are increasing the number of point-of-sale (PoS) machines at our customer centres and retail outlets. We have currently procured them on lease from banks in order to avoid incurring any immediate capex. Our target is to get 15,000 PoS machines in the BSNL network before the close of this financial year.
How has the policy and regulatory landscape evolved over the past one year?
There have been several deliberations during the past one year and most of them are work in progress. A key move was to do away with interconnection usage charges (IUC) for landlines. If we look at the landline penetration, India has one of the lowest in the world. While the penetration in developed countries is about 30-40 per cent, in India, it is just 2-3 per cent. Also, the rationalisation of IUC for mobile operators was a welcome step. It has helped companies come up with innovative plans and has been one of the main reasons that we are moving to free national roaming.
Going forward, we are of the view that some changes can be made to the regulatory framework. We have proposed that infrastructure sharing should come under TRAI’s purview. Currently, there is no regulation that mandates infrastructure sharing. Sharing will help reduce capex and will reduce the cost of business.
What will be your 4G strategy?
We have three strategies for providing 4G services to our subscribers. The first is that we are using Wi-Fi hotspots as 4G hotspots. They are used for mobile data off-loading, which will ensure seamless transition from mobile networks to Wi-Fi. We have deployed around 4,500 hotspots so far and will deploy another 40,000 over the next year and a half.
The second strategy is to offer 4G services through the classical long term evolution spectrum route. We have requested 5 MHz of frequencies on the 700 MHz spectrum band from the government. We plan to roll out 4G services through this route before end-2017.
The third strategy is to adopt a revenue sharing model, wherein we will utilise our spectrum and ask other vendors and suppliers to put up their equipment. We have 2500 MHz in 14 licensed service areas which we want to utilise.
What new business opportunities do you foresee?
Wi-Fi represents a significant opportunity, going forward. We have recently tied up with Tata Communications for allowing our customers to use Wi-Fi services when travelling abroad. Tata Communications is the aggregator of 44 million Wi-Fi hotspots spread across 100 countries around the world. This includes all airports andcommercial areas. Under the arrangement, a customer can use data services abroad through these Wi-Fi hotspots for a fixed sum, thereby avoiding a bill shock.
Another opportunity is offered by the enterprise business. Our enterprise business is growing by 25 per cent on a year-on-year basis. We have recently deployed a network for all the banks. As a result, SBI, Punjab National Bank and even private banks have switched to our network. They are relying on BSNL for providing their banking services. Moreover, we believe in collaborative competition and thus, revenue sharing arrangements are an area that will benefit operators. BSNL’s revenue sharing through towers is increasing at the rate of 40 per cent.
Using content to drive data growth is another opportunity. To this end, we are tying up with various private companies. Recently, we tied up with Citycable of Zee Network for launching Ditto TV.
What are the challenges that remain unaddressed?
There is a myth prevailing in the country that the radiation from mobile phone towers is harmful, which needs to be dispelled. Second, the issue of competition from over-the-top (OTT) players must be looked into from a regulatory point of view.
What are your views on consolidation in the sector?
We are in a consolidation phase and the government is also facilitating it. There is always scope for about five operators in this sector. More than five operators become very difficult to manage and less than five becomes a monopolistic kind of an arrangement. Of these five, one has to be a PSU, as it plays a balancing role in the sector. We are there in every nook and corner of the country. This means that as a PSU we are investing our resources in not only lucrative cities and other commercial areas but also in remote and strategic areas. For example, we have about 200-plus towers in Leh; our nearest competitor has 40. When natural calamities strike, typically, only BSNL’s network has worked.
What are the sector’s growth prospectsin 2017 and in the long term?
In the short term, there will be growth in the customer base and in data usage ata fast pace; however, monetisation of this growth will be static due to competition. That said, the long-term growth prospects for the sector are positive. Digital India is taking shape and the government is making concerted efforts to connect every nook and corner through optical fibre.
